India's solar manufacturing industry is entering a structural upcycle, driven by rapid growth in domestic solar installations, supportive government measures and rising localisation across the solar PV value chain, according to a report by SMIFS. The report said India is likely to see significant capacity additions in modules, cells, ingots and wafers as it looks to reduce import dependence and build a globally competitive solar manufacturing ecosystem.
SMIFS said the growth outlook is tied to a sharp rise in solar capacity in the country. India's installed solar capacity has increased from around 12 GW in FY17 to around 150 GW in FY26, and is expected to reach around 370 GW by FY31.
With solar likely to contribute the largest share of incremental power capacity, SMIFS said demand for solar modules and cells should remain strong over the medium to long term, prompting leading manufacturers to expand module and cell capacities while also investing in ingots and wafers.
The report said upstream localisation offers a major opportunity for domestic manufacturers, particularly as India currently imports more than 99 per cent of its wafer requirements. SMIFS said the shift towards an integrated ingot-to-wafer-to-cell-to-module ecosystem should improve supply-chain resilience, reduce reliance on imports and favour companies with scale and technological capability.
SMIFS said implementation of ALMM List-I and List-II, along with rising demand linked to domestic content requirements, is expected to support domestic module and cell makers. Higher utilisation at integrated facilities and rising internal consumption of locally manufactured cells should provide operating leverage and support profitability, the report said.
At the same time, SMIFS said rapid manufacturing capacity expansion could intensify competition, especially in module assembly. As the sector moves towards higher-efficiency technologies and deeper backward integration, the report said scale, cost leadership, technological capability and vertical integration will be key drivers of long-term profitability.
Integrated manufacturers are likely to gain market share, while smaller module-only players could face margin pressure and consolidation. SMIFS said it remains structurally positive on the sector, but added that selectivity will be important as rapid additions may create module oversupply and pressure realisations.
It said companies with large-scale capacity, backward integration into cells, ingots and wafers, TOPCon technology, strong balance sheets, high DCR exposure and export capability are likely to be better placed. Its positive stance is underpinned by strong order books, rapid capacity additions, policy-led localisation and increasing backward integration across the solar value chain.
Based on the current valuations and growth outlook over FY26E-28E, we have assigned 'buy' ratings on Waaree Energies Ltd (target price: Rs 3,590), Premier Energies Ltd (target price: Rs 1,344), Emmvee Photovoltaic Power Ltd (target price: Rs 418) and Vikram Solar Ltd (target price: Rs 220), suggesting 26-36 per cent upside potential in these stocks.
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